Working families want a fair health system where they are not penalised for their health insurance choices.
A fairer Medicare levy surcharge
It is not fair that working families on average incomes are required to pay the Medicare levy surcharge if they do not choose to take out private health insurance. The income thresholds have not been changed since 1997 but incomes have, resulting in people on average wages now becoming liable for the surcharge.
To make the surcharge fairer, the Government will refocus the Medicare levy surcharge on higher income earners by increasing the thresholds.
From 1 July 2008, singles with incomes up to $100,000 and families with incomes up to $150,000 will no longer be subject to the surcharge. Singles without private health insurance will save up to $1,000 and families will save up to $1,500 from these changes. Families with more than one child will have a higher threshold and therefore may save more than $1,500.
All Australians who choose to take out private health insurance will continue to benefit from the private health insurance tax rebate. This rebate reduces the cost of private health insurance for working families.
Choice about private health insurance
Ben and Emma are married. Ben has a good job and earns $70,000 a year. Emma recently graduated with a maths degree and has gone from part-time work to a full-time graduate job. Her income has increased from $15,000 to $45,000 a year.
Ben and Emma are young and healthy. They never thought they would need to take out private health insurance.
Under the previous Medicare levy surcharge arrangements, if Ben and Emma's combined income increased to over $100,000 they would have been required to pay the surcharge.
The new Medicare levy surcharge thresholds will ensure that Ben and Emma do not get hit unexpectedly by the surcharge.